Qualifiers are crucial when addressing withholding taxes on domestic business-to-business transactions in Latin America. These qualifiers – which include phrases like “usually,” “at the moment,” and “in other cases” – point to the inherent complexity of withholding tax applicability, rates, calculations and exemptions in Argentina, Brazil and Mexico.

According to a new Vertex white paper, this complexity arises from four primary sources:

Withholding taxes exist at the federal, provincial and municipal levels of government.

Withholding tax applicability, rates and calculations also vary, sometimes significantly depending on the country, the transaction and the level of government applying the tax.

These rules, rates and calculations are subject to frequent adjustments and legislative changes, especially during periods of economic stress during which governments are hungry for faster ways to collect revenue.

Some federal, provincial and even municipal tax authorities can impose substantial financial penalties – 100 percent of the tax due, in some cases – for compliance lapses.

This World Finance article, A taxing issue: how to navigate Latin America’s complex withholding tax regulations, is written by my colleague, Ana Paula Maciel, Principal Tax Research Analyst at Vertex and Ernesto Levy, Senior Leader, Global Indirect Tax at Intuit. The piece examines how withholding taxes are (usually) calculated in Latin America and then delves into withholding tax regimes and rules in Argentina, Brazil and Mexico.

Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.

About this Contributor

Fernando Silva

Director, Brazil Partnerships

Fernando has more than 23 years of experience in the technology segment, managing strategy, sales, and operations areas at all levels. He had worked for some of the highest-profile technology companies in Brazil and over the last eleven years has been focused on the Tax & Accounting market in Brazil and Latin America. His experience includes work with companies such as Oracle, Mastersaf, TaxWeb, and NFe do Brasil. Fernando graduated with a degree in Business Administration and an MBA in IT Management from FGV and UCI California University.